Korean news channel YTN (Channel 24)

2024-02-25 13:22:00


While the government announced the introduction of the ‘Corporate Value Up’ program to resolve the problem of undervaluation in the domestic stock market, demands for shareholder return are increasing in the market.

So-called ‘activist funds’ have begun to put pressure on companies, but companies are fighting back, saying that investment for long-term growth may be blocked.

Reporter Na Yeon-soo reports.


This is a notice convening the Samsung C&T shareholders’ meeting to be held on the 15th of next month.

Shareholder proposals from five companies, including British asset management company City of London, were put on the agenda.

This is because these shareholders, who have a total stake of 1.46%, requested to increase the dividend per share from 2,550 won to 4,500 won and to purchase 500 billion won worth of treasury stock.

Samsung C&T is complaining that if the proposal is made, the amount of shareholder return will exceed 100% of this year’s free cash flow, and that it will not be possible to secure investment resources for the company’s future in this way.

Hedge funds that go beyond simple investment and actively speak out in corporate management are called ‘activist funds.’

Although it protects shareholder rights and revitalizes the stock market, it can also harm a company’s long-term growth if it only seeks short-term profits.

The shareholder return rate in Korea over the past 10 years is 29%.

This is a significantly low level considering that the United States exceeded 92% and China exceeded 30% during the same period.

[황세운 / 자본시장연구원 선임연구위원 : 투자자들이 배당금의 확대라든지, 자사주 매입이라든지 또는 다른 적극적인 방법으로 기업의 가치를 제고시키고자 하는 그런 욕구가 이전에 비해서 굉장히 강해졌다, 이런 것들이 결국은 행동주의라는 결과로 이어지고 있다고 평가할 수 있죠.]

The government’s ‘value up’ policy to stimulate the stock market is adding momentum to this trend.

However, we must be wary of malicious activism.

A typical example is when several funds join together like a pack of wolves to attack a company and then leave with only short-term profits.

[이정환 / 한양대학교 경제금융대학 교수 : 행동주의 펀드들이 기업의 경영권에 부정적인 영향을 끼친다고 하면 장기적인 기업의 밸류업, 투자와 수익성 확보에 장애가 될 수 있는 요인이 될 수 있다고 보면 되겠습니다.]

As the voices of activist funds grow louder ahead of next month’s general shareholders’ meeting season, experts say individual investors should also objectively look at the arguments for increased shareholder returns.

This is Na Yeon-su from YTN.

Photographer: Kim Jeong-han
Graphics: Hyojin Kim

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